Rush of bookings for DLF housing project in Delhi

Rush of bookings for DLF housing project in Delhi
The Financial Express, April 9, 2009, Page 1

The massive pent up demand for affordable flats in Indian metros was on display in Delhi as DLF launched its largest-ever residential project in the city. The first day alone saw 900 bookings for a set of 1,400 flats at the 200-acre residential-cum-office complex in central Delhi. The 1,200 sq ft flats will cost around Rs 54 lakh each. That’s less than half the comparable cost of similar properties in nearby precincts of central Delhi, which are currently priced at around Rs 1.2 crore per flat.

The project is a rare one in India, as decades-old urban land ceiling legislation vested all housing development with government-run development bodies—which explains the rush. In Delhi, the Act was repealed only in 2006 and following that, the DLF Capital Greens project is one of the first ventures from the private sector. An Emaar MGF project to build a residential block on the Yamuna riverfront is on government land and will be handed over to the developers only after the Commonwealth Games is concluded in October 2010.

Land for the DLF project, on the other hand, was bought by the company from the defunct Swatantra Bharat Mills at the end of 2007. Sources said that the initial 1,400 flats would be built over ten buildings. The New Delhi Municipal Corporation would be responsible for the landscaping and greening of the neighbourhood of the project, which is being developed by India’s largest real estate company.

The housing sector in India has been massively underprovided, with a shortage estimated by the government at over 20 million units. The combination of land control in such a scenario has, in turn, created massive premiums for real estate developers—they have been one of the best performers on the stock markets. These companies have focused on high-end flats, as the returns were the most from this category.

But that picture changed once the economic downturn set in. Companies have seen potential buyers lose interest across the country as income flows have dried up. So, now companies are cutting prices and also moving towards affordable housing.

For instance, DLF has cut prices of its apartments in the Garden City project on Old Mahabalipuram Road on the outskirts of Chennai by Rs 200 per sq ft. When contacted by FE, DLF refused to comment on its Delhi project.